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What Washington Needs to Know About Freight Rail

A new Congress and Administration presents opportunities for new policies, education and relationships. U.S. freight railroads, partly fueled by the deregulatory legacy of the 1980 Staggers Act, generated nearly $274 billion in output, 1.5 million jobs and $33 billion taxes in 2014 alone. The industry is eager to be a resource not only the policy aspects of rail, but also infrastructure, tax reform, trade and related issues.

The freight railroad industry recognizes that to spur significant economic growth, policymakers must advance macro-policies that extend beyond railroads. We call on all candidates to advance these important policies:​

Tax Reform

We need a simpler and fairer tax code, reducing the corporate rate — the highest in the industrialized world — to a globally-competitive level to broaden the tax base, enhance U.S. economic development, promote growth and reduce debt. Policymakers across the ideological spectrum should work together to simplify our tax code, close loopholes that pick winners and losers, increase transparency and put all expenditures on the table to create agreement and keep American companies at home. Tax reform was bipartisan in 1986 when it was last comprehensively tackled and it can be again in 2017.

Regulatory Improvement

New rules should be empirically driven, supported by cost-benefit analysis and geared towards today's innovation economy. Too often government makes rules in a vacuum and without an eye toward the future. Assessment of the cumulative impact of proposed regulation on industry must be part of every rulemaking. Rules can become quickly outdated when reacting to the issue of the day, which can sometimes compel overreaction. We must make the process more transparent and collaborative, and we must reduce the estimated $2 trillion compliance cost and hold decision makers accountable.

Infrastructure Investment

Elected officials must institute a system that eliminates the practice of transferring money from the general fund to the
Highway Trust Fund. Policies should require highway users, such as trucks and everyday drivers, to pay for their fair use of infrastructure and put in place sustainable and realistic plans that will improve transportation and create jobs. The gas tax as we know it is no longer sustainable and we should transition to a truly equitable system such as a weight distance fee. Policymakers should move forward with aggressively updating our crumbling infrastructure and seek to emulate privately owned freight rail, which understands that deferred maintenance is not an option.

Comprehensive Energy Plan

We must embrace the innovation that led to the American energy revolution, helping our country move closer to energy independence. No single form of energy will deliver for any one community, so we must truly embrace an "all-of-the-above" strategy. Traditional resources such as coal, ethanol, crude and natural gas, as well as alternative sources like wind and solar, all can power communities, all can create jobs and all must be a part of the energy portfolio. Federal policies should not favor certain energy forms. We need an energy plan that enables local solutions that keep costs down and job gains up.

Fair and Open Trade

Fair and open trade helps small businesses reach new markets, diversifies inventory of available goods and fosters the competition that undergirds American capitalism. Efficiencies and productivity gains have reduced the manufacturing work force. But still today, one in four manufacturing jobs depends on exporting goods, and according to the U.S. Chamber of Commerce, factories have nearly doubled output over the last twenty years. Trade today supports 40 million quality jobs. We must ensure that current and future agreements are fair and put American workers first, but we must not turn our backs on the free trade agreements that have brought prosperity to American workers.

The United States Surface Transportation Board (STB) has recently proposed a series of regulations that would undermine the ability of our country's freight railroads to operate in the manner upon which all Americans rely. For example, one proposed rule would force carriers to turn their traffic over to competitor railroads, which would significantly compromise network efficiency, and in turn reduce investments.

In 2015, Congress reauthorized the STB for the first time since its creation in 1995, expanding the Board from three members to five, but generally maintaining the de-regulatory mission of the agency: to regulate only where there is an absence of effective market competition. In light of the STB's reregulation efforts, the freight rail industry believes the Trump Administration should nominate STB Board members who are committed to sound economic principles and understand that freight rail regulations impact the entire economy.

Further, the industry believes that STB members should be committed to weighing the costs and benefits of proposed rules and evaluating the cumulative impact of their proposals on the railroad industry and national economy.

Last, STB members should be mindful of their charge by Congress to make a continuing effort to assist railroads in earning enough revenue to build and maintain the infrastructure necessary to meet the current and future demand for rail transportation.

Forward-Thinking Safety Regulations

Advances in technology are constantly making the transportation industry safer and more efficient. For example, the Department of Transportation (DOT) is promoting the development of autonomous vehicles to make our highways safer, and railroads are hard at work implementing Positive Train Control, which once installed will automatically bring trains to a stop in the event of certain unsafe situations.

The federal government needs to ensure that no regulations are enacted that could prevent freight railroads from harnessing new technologies to make their network safer and more efficient. Rather than layering on prescriptive rules that lock the industry into 20th century (or older) practices and technologies, regulators must embrace performance-based approaches that incentivize industry to innovate in order to achieve policy goals. As former Transportation Secretary Norm Mineta recently articulated, "Let's not let the innovation train leave the station without the United States on board."

The industry supports corporate tax reform that lowers the rate to at least 25%, and does not oppose repatriation of some kind, but any such deal must be a bridge to a sustainable source of funding for the Highway Trust Fund (HTF). Since 2008, policymakers have transferred $143 billion in general funds to the HTF. As a general rule, the various freight transportation modes should pay their own way. The traditional connection in which users of freight infrastructure pay for that infrastructure should not be broken, and policymakers should seriously consider solutions such as a weight distance fee to instill a truly equitable system.

Targeted Reforms at the Department of Transportation

Absent a drastic overhaul, policymakers can enact targeted reforms at the U.S. DOT to improve the quality and effectiveness of regulation. DOT should ensure that:

Regulations are enacted only if benefits outweigh costs, and agencies analyze the cumulative effects of proposed regulations.

"Guidance" and "emergency orders" are limited as regulatory tools.

Emphasis on Public-private Partnerships (PPPs)

As part of a possible infrastructure plan, policymakers should also implement more public-private partnerships (PPPs) for freight railroad infrastructure improvement projects where the project provides significant public benefits or meets public needs. When more people and freight move by rail, the public benefits through lower shipping costs, reduced highway gridlock, enhanced mobility, lower fuel consumption, lower greenhouse gas emissions, and improved safety. Partnerships allow expanded use of rail transportation, including passenger rail service, with government only paying for the public benefits of a project. Meanwhile, freight railroads pay for the benefits they receive. It's a win-win for all involved.

Grade Crossing Funding

The grade crossing collision rate has fallen nearly every year since 1980, but too many collisions still occur. Virtually all of them are preventable, so the focus should be on educating the public regarding safety at crossings, on engineering solutions (such as closing unneeded crossings and upgrading warning devices) that prevent collisions, and on enforcement of applicable traffic laws. The federal "Section 130" program, which provides federal funds to states for grade crossing safety enhancements, has helped prevent tens of thousands of injuries and fatalities. Continued dedicated funding of this important program will mean more injuries averted and more lives saved at grade crossings.

Financing for PTC on passenger and commuter railroads

The nation's freight rail industry remains on schedule for fully implementing positive train control (PTC) across the country and in accordance with the timetable established by Congress last year. PTC is a set of highly advanced technologies designed to make freight rail transportation — already one of the safest U.S. industries — even safer by automatically stopping a train before certain types of accidents occur. But commuter and passenger rail networks face budget obstacles in implementing PTC. The freight rail industry supports its partners in the passenger sector, knowing it is difficult to provide passenger rail service at a profit, and believes that federal infrastructure spending should help these systems implement this important technology.

America's privately owned freight rail network spans over 140,000 miles and is made up of 107.3 billion pounds of steel — enough to build 6,667 Eiffel Towers. If the network were laid end to end, it would make 5.6 trips around the earth.​

Freight rail helps maintain our quality of life.

Freight rail plays a crucial role in maintaining our quality of life in a number of different ways. They transport the chemicals used to purify our drinking water, fertilizers used to grow crops, cars that move workers and families and materials to build homes a​nd businesses.​

Freight rail serves many customers.

The industry serves myriad customers, including nearly every industrial, wholesale, retail and resource-based sector of the economy. Adjusted for inflation, rail rates have fallen 42% since 1981.

Freight railroads are unique in their scale of operations.

One rail car of wheat is enough to produce 258,000 loaves of bread; one rail car of coal is enough to provide electricity for 21 homes for a year; one train can carry 750 automobiles and one rail car of corn is enough to supply the lifetime feed requirements of around 37,000 broiler chickens.

Freight rail has a huge economic impact.

The economic impact of the industry is staggering: In 2014, freight railroads generated $274 billion in economic activity and $33 billion in tax revenue. The impact of rail spending in 2014 was nearly equal to the GDP of Finland, and the industry's state and local tax generation was greater than the taxes collected by 30 individual states.

Freight rail helps support jobs in many industries across the country.

Freight rail supported nearly 1.5 million jobs — and $88 billion in wages — in a number of different industries across the country in 2014.

Freight rail helps move huge amounts for each American.

Together with trucks and barges, freight trains help move an average 54 tons of goods per American each year.

Freight rail is one of the most environmen​tally friendly ways to move cargo.

A freight train can move a ton of freight 473 miles on only one gallon of fuel. Moving freight by rail instead of truck leads to a 75% reduction in greenhouse gas emissions.

Railroads have spent $26 billion in private money over the last five years.

Railroads make huge investments to ensure operations are as smooth and efficient as possible, spending around $26 billion a year over the last five years in private money — not taxpayer funds — to modernize equipment, maintain infrastructure and develop innovative technology.​

The American freight rail network is one of the s​afes​t freight transportation networks in the entire world.

Freight rail moves 2.5 million carloads of plastics, fertilizers and other chemicals from coast to coast every year. A full​ 99.999% of shipments containing hazardous materials reach their destinations without incident. And in 2015, nearly 2,000 first responders learned how to handle derailments at the industry's testing headquarters in Colorado, while more than 800 received online training.​​

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